Bond Coupon Rate
What is a Bond Coupon Rate?
A bond coupon rate is the rate of interest a corporation pays on a bond it has issued.
![bcr 1](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-1.jpg)
How it Works
A corporation may need money to fund a project.
![bcr 2](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-2.jpg)
One way for the corporation to raise money is with a bond.
![bcr 3](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-3.jpg)
A bond has a face value.
![bcr 4](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-4.jpg)
This is how much investors will pay for the bond.
![bcr 5](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-5.jpg)
The bond will also have a coupon or stated rate.
![bcr 6](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-6.jpg)
This is the rate of interest the issuer will pay the investor along the way.
![bcr 7](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-7.jpg)
The coupon rate is determined by the issuer at the time of issue.
![bcr 8](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-8.jpg)
Typically, it is based on prevailing interest rates at the time of issue.
![bcr 9](https://seeaccountingnow.online/wp-content/uploads/2021/08/bcr-9.jpg)
© R.J. Hickman 2020